The first victim of austerity? The impact of the worldwide ’neoliberal turn’ on the breakdown of the Yugoslav Federation

The Essay descri­bes the break­down of Yugo­s­la­via as a result of the dest­ruc­tion of the wel­fa­re sys­tem and thus the soci­al fabric by aus­teri­ty mea­su­res. It tri­es to show how European and world­wi­de neo­li­be­ral poli­tics had a major influ­ence on the eco­no­mic down­turn and thus lead to the emer­gence of so­ far unim­portant eth­nic dif­fe­ren­ces, to natio­na­lism, and final­ly to war.

edit: my word­press-skills aren’t qui­te enough sol­ve all the for­ma­ting and style pro­blems of the arti­cle, sor­ry for chan­ges of typeface and some red lines in the online ver­si­on!

„the domestic order of socia­list Yugo­s­la­via was stron­gly influ­en­ced by its place in the inter­na­tio­nal order: its geo­po­li­ti­cal loca­ti­on, its pat­terns of tra­de, and for­eign alli­an­ces, and the requi­re­ments of par­ti­ci­pa­ti­on in the inter­na­tio­nal eco­no­my and its various orga­ni­za­ti­ons.“ (Wood­ward 1995: 16)

1. Intro­duc­tion

The break­down of Yugo­s­la­via and the fol­lo­wing war is com­mon­ly descri­bed as a result of (his­to­ri­cal) eth­nic ten­si­ons, exces­si­ve natio­na­lism, an inef­fec­tive federa­list sys­tem and repres­si­on of free­dom under socia­lism (see Wood­ward 1995: 7–8 or wiki­pe­dia: Yugo­s­lav wars). While con­flict par­ties on all sides surely show­ed a frigh­ten­ing racist and natio­na­list face and wit­hout deny­ing the eco­no­mic pro­blems of the socia­list peri­od, I argue that one of the most important rea­sons for the mel­tdown is usual­ly omit­ted: The dest­ruc­tion of the wel­fa­re sys­tem and thus the soci­al fabric by neo­li­be­ral aus­teri­ty poli­tics. Even US based intel­li­gence com­pa­ny Strat­for (not know as a very cri­ti­cal or lef­tist orga­ni­za­ti­on) wri­tes in an inter­nal Email published by Wiki­leaks, that “the IMF[Inter­na­tio­nal Mone­ta­ry Fund] aus­teri­ty mea­su­res impo­sed on Yugo­s­la­via was [sic] in part to bla­me for the start of the war there”(Wikileaks/Stra­te­gic Fore­cas­ting, Inc. 2009). As I will show in Part 3, the­re was a world­wi­de neo­li­be­ral turn of eco­no­mic poli­cy after the eco­no­mic down­turn in the wake of the 1973 oil cri­sis that also chan­ged the EU and its dealings with Yugo­s­la­via. The kind of Aus­teri­ty poli­tics that have been imple­men­ted sin­ce 2008 by the Troi­ka (European Com­mis­si­on, European Cen­tral Bank and Inter­na­tio­nal Mone­ta­ry Fund) in Greece and Spain had alrea­dy been forced on Yugo­s­la­via from the 70s on. They aimed at redu­cing the for­eign tra­de defi­cit by bud­get cuts in the wel­fa­re sys­tem and government insti­tu­ti­ons and by ope­ning the coun­try to for­eign invest­ment. But ins­tead of increa­sing the eco­no­mic sta­bi­li­ty of the Fede­ra­ti­on, they only lead to increa­sing for­eign debt, mas­si­ve unem­ploy­ment and the dis­mant­ling of soci­al pro­tec­tion sys­tems. As eco­no­mic pro­blems were always ans­we­red with even more seve­re aus­teri­ty mea­su­res, the eco­no­my spi­ra­led down­wards to a point whe­re “One mil­li­on peop­le were offi­ci­al­ly regis­te­red as unem­ploy­ed. The increa­sing rate of unem­ploy­ment was above 20 per­cent in all repu­blics except Slo­ve­nia and Croa­tia. Infla­ti­on was at 50 per­cent a year and clim­bing. The house­hold savings of appro­xi­mate­ly 80 per­cent of the popu­la­ti­on were deple­ted“ (Wood­ward 1995:73). As the peop­le strugg­led for secu­ring basic neces­si­ties and ser­vices they could­n’t afford any more, natio­na­list move­ments beca­me more and more appe­aling. Ten­si­ons aro­se out of the dif­fe­rent abi­li­ties of the repu­blics to com­pe­te in the glo­bal mar­ket. While Slo­ve­nia and Croa­tia were rela­tively well off, the situa­ti­on in the other repu­blics was even more dra­ma­tic. The for­mer accu­sed the lat­ter of inhi­bi­t­ing the growth and com­pe­ti­tiveness of their indus­try and saw inde­pen­dence as a way to impro­ve their con­di­ti­on. It seems plau­si­ble that natio­na­list sym­bols and a new inter­pre­ta­ti­on of his­to­ri­cal deve­lop­ments aro­se as a jus­ti­fi­ca­ti­on for this sepa­ra­ti­on. Con­si­de­ring the seve­ri­ty of the pro­blems and ima­gi­ning how it must feel to live in a once suc­cess­ful but now rapidly dete­rio­ra­ting eco­no­my it seems that Susan Wood­ward is cor­rect when she says “to exp­lain the Yugo­s­lav cri­sis as a result of eth­nic hat­red is to turn the sto­ry upsi­de down and begin at its end.“ (Wood­ward 1995:18). Thus, I will begin at the begin­ning and try to show how European and world­wi­de neo­li­be­ral poli­tics had a major influ­ence on the eco­no­mic down­turn and thus lead to the emer­gence of so-far unim­portant eth­nic dif­fe­ren­ces, to natio­na­lism, and final­ly to war.

2. Yugo­s­la­via, Part I

Self-manage­ment and the balan­ce of powers

When the Socia­list Federal Repu­blic of Yugo­s­la­via was foun­ded in 1946 by com­mu­nist par­ti­san forces, its con­sti­tu­ti­on was clo­se­ly mode­led on Leni­nist ide­as of the sta­te and very simi­lar to that of the USSR. But just two years later, in the Tito-Sta­lin split, it beca­me an inde­pen­dent com­mu­nist sta­te and refu­sed to align its­elf with eit­her the capi­ta­list nor the socia­list bloc. Its eco­no­mic and soci­al poli­cy after­wards reflec­ts this fra­gi­le sta­tus bet­ween the two sys­tems, try­ing to for­mu­la­te its own inde­pen­dent agen­da. It was in many respec­ts a child of two worlds. To pro­tect its­elf from mili­ta­ry aggres­si­on and build eco­no­mic con­nec­tions, Yugo­s­la­via beca­me an obser­ving mem­ber in both wes­tern and com­mu­nist inter­na­tio­nal Orga­ni­za­ti­ons. It mana­ged to obtain an obser­ver sta­tus in the (com­mu­nist) Coun­cil for Mutu­al Eco­no­mic Assi­s­tan­ce and the (com­mu­nist) War­saw Trea­ty Orga­ni­za­ti­on as well as the (wes­tern) OECD and it met the requi­re­ments of the (wes­tern) Gene­ral Agree­ment on Tariffs and Tra­de (GATT). In Addi­ti­on, Yugo­s­la­via was in major play­er in the Non-ali­gned-Move­ment, try­ing to build a coali­ti­on of sta­tes that refu­sed to take sides in the cold war.

The eco­no­mic poli­cy had lar­ge “socia­list” ele­ments, the most visi­ble of the­se worker self-manage­ment. In a uni­que move, the com­mu­nist lea­dership trans­fer­red a huge amount of power to local aut­ho­ri­ties and coun­cils of workers that were enab­led to deci­de on a wide ran­ge of mat­ters. “Local governments were respon­si­ble for con­su­mer mar­kets, wel­fa­re, housing, local roads, ele­men­ta­ry schools, health care and unem­ploy­ment” (Wood­ward 1995:39) and ‘coun­cils of pro­du­cers’ were instal­led “as legis­la­ti­ve cham­bers on all levels of the sta­te” (Unkov­ski-Kori­ca 2015:26). In the public sec­tor, workers were gua­ran­te­ed to recei­ve equal pay for equal work, the­re was a mini­mum wage in all sec­tors and sub­stan­ti­al wel­fa­re and health-care sys­tem. Unli­ke other com­mu­nist sta­tes, Yugo­s­la­via had a signi­fi­cant pri­va­te sec­tor. Soci­al ine­qua­li­ty was not along eth­nic lines, but depen­ded main­ly on if you were employ­ed in the public sec­tor and were ent­it­led to access the health­ca­re and wel­fa­re sys­tems con­nec­ted to it, or in the pri­va­te sec­tor wit­hout many of the­se bene­fits. As most of the jobs were crea­ted in urban are­as, rural envi­ron­ments were also signi­fi­cant­ly poo­rer. But over­all, the Fede­ra­ti­on was eco­no­mi­c­al­ly pro­spe­ring, it was one of the fas­test-gro­wing eco­no­mies of the 1950s and peop­le enjoy­ed rela­tively high living stan­dards(see Unkov­ski-Kori­ca 2015). Yugoslavia’s midd­le-class could free­ly tra­vel the world and all its citi­zens enjoy­ed a free­dom that was unknown in other “socia­list” sta­tes. Yugo­s­la­via was also a major play­er in inter­na­tio­nal poli­tics. It had ties to both wes­tern and eas­tern super­powers and was a major lea­der of the Non-ali­gned-Move­ment that refu­sed to take sides in the cold war. But very soon after, the eco­no­mic poli­cy of the ruling par­ty, the League of Com­mu­nists of Yugo­s­la­via (LCY) chan­ged and led the coun­try into a debt trap it never reco­ve­r­ed from. To under­stand why the LCY embar­ked on a export- and mar­ket-ori­en­tend stra­te­gy that was ulti­mate­ly incom­pa­ti­ble with self-manage­ment, one has to con­si­der the world­wi­de trend towards a dif­fe­rent eco­no­mic sys­tem, a deve­lop­ment I will call the “neo­li­be­ral turn”.

3. The world­wi­de neo­li­be­ral turn

3.1 Class war – from above

After World War II, near­ly all ‘wes­tern’ eco­no­mies were gro­wing rapidly, pro­duc­tion was get­ting more and more effi­ci­ent and new con­su­mer goods beca­me wide­ly avail­ab­le. Despi­te other dif­fe­ren­ces bet­ween the US, Japan and Euro­pe „what all of the­se various sta­te forms had in com­mon was an accep­tan­ce that the sta­te should focus on full employ­ment, eco­no­mic growth, the wel­fa­re of its citi­zens, and that sta­te power should be free­ly deploy­ed […] to achie­ve the­se ends. Fis­cal and mone­ta­ry poli­ci­es usual­ly dub­bed ‘Keyne­si­an’ were wide­ly deploy­ed to dam­pen busi­ness cycles and to ensu­re rea­son­ab­le full employ­ment“ (Har­vey 2005: 10). In a ‘class com­pro­mi­se’ with Capi­tal, Tra­de uni­ons were inte­gra­ted into the regu­lar insti­tu­ti­ons of the sta­tes and had a major influ­ence “that cur­bed the power of capi­tal and exten­ded the power of labour even into the work­place” (Har­vey 2005:112, see also Apel­do­orn 2002: 63–65) Through tra­de libe­ra­li­sa­ti­on under GATT (Gene­ral Agree­ment on Tariffs and Tra­de) com­pe­ti­ti­on on the glo­bal mar­ket began to grow, but natio­nal regu­la­ti­ons accord­ing to for­eign tra­de and invest­ment limi­ted this com­pe­ti­ti­on. It seems that the situa­ti­on in Yugo­s­la­via was very simi­lar to that of most emer­ging and deve­lo­ped coun­tries, only that the­re was an even stron­ger influ­ence of the working class which led to the intro­duc­tion of the “self-management”-approach.

Things star­ted to chan­ge when “at the end of the 60s for the first time pro­duc­tivi­ty gains began to decli­ne whe­re­as wages con­ti­nued to rise – resul­ting in a fal­ling sha­re of pro­fits wit­hin the inco­me dis­tri­bu­ti­on” (Apel­do­orn 2002: 65), becau­se of the Tra­de Uni­ons’ strong bar­gai­ning posi­ti­on. Har­vey argues, that the “upper clas­ses ever­y­whe­re felt threa­tened“ (Har­vey 2005:15) by this deve­lop­ments, as “real inte­rest rates went nega­ti­ve and and paltry divi­dends and pro­fits were the norm” (ibid). Piket­ty shows this rela­ti­ve loss of eco­no­mic wealth in the upper clas­ses hap­pen­ed from 1910 onwards but was rever­sed in the 1970s (see Table 1). This rever­se hap­pen­ed becau­se, in an iro­nic refe­rence to Marx, the capi­ta­list class beca­me awa­re of its com­mon inte­rests and star­ted to wage class war – from above (see Har­vey 2005:43,44). Alrea­dy intro­du­ced in works like F.A. Hayek’s “The road to serfdom”(1944) the con­cept of Neo­li­be­ra­lism that did have much influ­ence so far beca­me their main ‘wea­pon’. As defi­ned by Har­vey: „Neo­li­be­ra­lism is in the first instan­ce a theo­ry of poli­ti­cal and eco­no­mic prac­tices that pro­po­ses that human well-being can best be advan­ced by libe­ra­ting indi­vi­du­al entre­pre­neu­ri­al free­doms and skills wit­hin an insti­tu­tio­nal frame­work cha­rac­te­ri­zed by strong pri­va­te pro­per­ty rights, free mar­kets, and free tra­de“ (Har­vey 2005:2). It soon beco­me appa­rent, that only a very limi­ted num­ber of peop­le pro­fi­ted from this kind of free­dom, but capi­ta­list orga­ni­za­ti­ons took gre­at efforts to pro­mo­te the new para­digm. In 1972, the US-Ame­ri­can Cham­ber of Com­mer­ce star­ted to hea­vi­ly expand its base of cor­po­ra­te mem­bers and star­ted a free mar­ket and pro-busi­ness lob­by cam­pai­gn. In the same year, the US ‘Busi­ness Round­ta­ble’ was foun­ded and its mem­bers “spent clo­se to $900 mil­li­on annu­al­ly (a huge amount at that time) on poli­ti­cal mat­ters.” (Har­vey 2005:44). The pro-neo­li­be­ra­lism move­ment had its first suc­ces­ses in the US, but soon expan­ded world­wi­de.

3.2 The neo­li­be­ral turn in Euro­pe

The advo­ca­tes of neo­li­be­ra­lism also mana­ged to chan­ge the eco­no­mic poli­cy of all European Coun­tries, albeit not wit­hout a strugg­le and not as much as in the US, Chi­na and Japan. After WWII, all European governments had expan­ded their wel­fa­re sys­tems and thus public sec­tor expen­dit­u­re. When growth and pro­fits began to fall in the 60’s, European coun­tries first expe­ri­men­ted with nati­on-sta­te-cen­te­red solu­ti­ons to impro­ve their eco­no­mic con­di­ti­on. Apel­do­orn iden­ti­fies three dif­fe­rent approa­ches: The Bri­tish, the Ger­man and the French model. (Apel­do­orn 2002:72–77) Bri­tain under Mar­ga­ret That­cher embar­ked on a neo­li­be­ral cour­se with a firm com­mit­ment to inter­na­tio­nal free tra­de, reli­an­ce on mar­ket mecha­nism with litt­le inter­fe­rence from the sta­te and finan­ci­al dere­gu­la­ti­on. Ger­ma­ny was also “ful­ly com­mit­ted to inter­na­tio­nal free tra­de” (Apel­do­orn 2002: 74), but in its “soci­al” mar­ket eco­no­my pre­ser­ved a rela­ti­ve high degree of Uni­on power (“Mit­be­stim­mung”) and its banks were more clo­se­ly tied to the indus­try and less libe­ral than the Bri­tish banks. Fran­ce first tried to natio­na­li­ze huge parts of the eco­no­my and under­took a big Keyne­si­an refla­ti­on pro­gram­me. Here, the sta­te retai­ned a strong influ­ence over eco­no­mic poli­ci­es and mar­ket mecha­nisms were limi­ted to a rela­tively small degree.

In the 80’s, most governments began to ack­now­ledge that a “European” solu­ti­on to the eco­no­mic cri­sis was necessa­ry and began to relaunch efforts to crea­te an inter­nal mar­ket and what in 1992 beca­me the EU. The dif­fe­rent natio­nal models of capi­ta­lism spar­ked a con­tro­ver­sy about what kind of Euro­pe was to be crea­ted. Jac­ques Delors, pre­si­dent of the European Com­mis­si­on from 1985–1995, envi­sio­ned a ‘European soci­al model’ that com­bi­ned “the com­pe­ti­ti­ve mar­ket with a sys­tem of soci­al soli­da­ri­ty, all in a long-term per­spec­tive of sustainab­le growth and wel­fa­re” (Apel­do­orn 2005: 79), resemb­ling the ‘ger­man’ model men­tio­ned ear­lier (which saw a con­si­dera­ble pro­tec­tion of the inte­rests of labour). But when the European Com­mu­ni­ty was for­mal­ly estab­lished with the Maas­tricht Trea­ty in 1992, very litt­le of this pro­tec­tion remai­ned and the EC had beco­me a main­ly neo­li­be­ral pro­ject with “free” tra­de, “fle­xi­ble” labour mar­kets and huge pri­va­tiza­ti­on efforts. Apel­do­orn claims, that “the fail­u­re of the soci­al dimen­si­on must be attri­bu­t­ed not only to the intran­si­gence of the Bri­tish oppo­si­ti­on […], but also to the strong resis­tan­ce put up by the trans­na­tio­nal busi­ness lob­by” (Apel­do­orn 2005: 148).

What is known as “lob­by­ism” today, was most likely born, or at least hea­vi­ly increa­sed in the years bet­ween WWII and the Maas­tricht trea­ty. Neo­li­be­ral Think Tanks like the Mont Pèle­rin Socie­ty (1947) emer­ged and shaped public dis­cour­se. Simi­lar­ly to the US, the capi­ta­list class beca­me awa­re of their com­mon inte­rest and how they could pur­sue them. One examp­le is that “from the mid-1970s onwards, the Swe­dish Employer’s Fede­ra­ti­on […] laun­ched a pro­pa­gan­da cam­pai­gn against exces­si­ve regu­la­ti­on and for the increa­sing libe­ra­li­za­ti­on of the eco­no­my “ ( Har­vey 2005: 113) A litt­le later, in 1983, the European Round­ta­ble of Indus­tria­lists was foun­ded, quick­ly estab­lished links to top poli­ti­ci­ans in the European com­mis­si­on (it was co-foun­ded by Vis­count Eti­en­ne Davi­gnon “at the time one of the vice-pre­si­dents of the European Com­mis­si­on and char­ged with indus­tri­al affairs” (Apel­do­orn 2005: 84) and beca­me the sin­gle most influ­en­ti­al inte­rest group in Euro­pe. Apel­do­orn quo­tes for­mer For­mer Com­mis­sio­ner Peter Suther­land, who sta­tes that: “I belie­ve that it [the ERT] did play a signi­fi­cant role in the deve­lop­ment of the 1992 pro­gram­me. In fact one can argue that the who­le com­ple­ti­on of the inter­nal mar­ket pro­ject was initia­ted not by governments but by the Round Table, and by mem­bers of it” (Apel­do­orn 2000: 168). As the pro­gram­me of the European Uni­on was increa­singly shaped by neo­li­be­ral think tanks and busi­ness lob­by orga­ni­za­ti­ons, Uni­on Power vanis­hed and with it, the Visi­on of a “soci­al” Euro­pe. This also chan­ged poli­cy towards other coun­tries in Euro­pe and the pos­si­bi­li­ty of trans­na­tio­nal inter­ven­ti­ons of orga­ni­za­ti­ons like the IMF (Inter­na­tio­nal Mone­ta­ry Fund), as we will see in the case of for­mer Yugo­s­la­via.

4. Yugo­s­la­via, Part II

4.1 Ori­en­ta­ti­on on the export mar­ket

The turn to neo­li­be­ral eco­no­mic poli­ci­es also had its influ­ence on Yugo­s­la­via. The eco­no­mic stra­te­gy of the LCY shifted to more mar­ket- and export-ori­en­ted poli­ci­es. Accord­ing to Unkov­ski-Kori­ca “becau­se a gro­wing eco­no­my was important for the main­ten­an­ce of natio­nal inde­pen­dence, quick returns on invest­ments beca­me ever more cen­tral to the cal­cu­la­ti­ons of the Yugo­s­lav com­mu­nist lea­dership” (Unkov­ski-Kori­ca 2015:28). A series of new laws based the inco­me of workers on the suc­cess of their pro­duc­ts on the inter­na­tio­nal mar­ket ins­tead of recei­ving a fixed inco­me for a cer­tain type of work. This lead to a (pro­bab­ly inten­ded) rise in com­pe­ti­ti­on bet­ween dif­fe­rent enter­pri­ses, but also to a (pro­bab­ly less inten­ded) wide­ning inco­me gap bet­ween the workers in dif­fe­rent indus­tries and repu­blics. To redu­ce the for­eign tra­de defi­cit, the YLC tried to deve­lop the indus­tri­al are­as (that were main­ly situa­ted in Slo­ve­nia and Croa­tia) and the agri­cul­tu­ral hubs (main­ly found in Ser­bia). This hap­pen­ed at the expen­se of lar­ge are­as of Bos­nia that saw a huge decli­ne in sub­si­dies from the Fede­ra­ti­on (and sub­se­quent­ly in living stan­dards). This une­qual dis­tri­bu­ti­on spar­ked con­tro­ver­sies bet­ween the repu­blics and the Fede­ra­ti­on and recei­ved cri­ti­cism from all sides. The more indus­tri­al (and thus more suc­cess­ful on the world mar­ket) Repu­blics Slo­ve­nia and Croa­tia fea­red that their own pro­gress could be retar­ded by the other repu­blics (See Unkov­ski-Kori­ca 2015:31). The other repu­blics pro­bab­ly unders­tood this as a lack of com­mit­ment to the inte­gri­ty of the Yugo­s­lav Fede­ra­ti­on and war­ned of the dan­gers of decen­tra­li­za­ti­on. For examp­le, “Bos­nia com­p­lai­ned about its Deve­lop­ment Fund allo­ca­ti­on and Alba­ni­ans in Koso­vo and Mace­do­nia pro­tested long years of neglect and opp­res­si­on in 1968” (Unkov­ski-Kori­ca 2015:33). Alt­hough most likely awa­re of the ten­si­ons, the YLC con­ti­nued their cour­se by res­to­ring hier­ar­chies in the work­place and dis­mant­ling the self-manage­ment sys­tem by intro­du­cing a new “busi­ness board” in all enter­pri­ses in 1969 to increa­se their com­pe­te­tiveness. In 1970 and 1980 they signed “free tra­de agree­ments” with the EEC (European Eco­no­mic Com­mu­ni­ty) which “acce­le­ra­ted depen­den­cy on capi­tal and hard cur­ren­cy imports to finan­ce export growth” (Ziko­vic 2015: 48) and con­se­quent­ly bor­ro­wed huge amounts of for­eign cur­ren­cy, most dol­lars, “to import advan­ced tech­no­lo­gy to impro­ve its (Yugoslavia’s) com­pe­ti­tiveness” (Wood­ward 1995: 47).

The­se loans beca­me a major pro­blem in the world­wi­de reces­si­on after the oil pri­ces shock. First­ly, tra­de libe­ra­li­sa­ti­on under the EEC was a one-way-street as the other european coun­tries “rai­sed tra­de bar­ri­ers in exac­t­ly tho­se are­as whe­re Yugo­s­la­via enjoy­ed com­pe­ti­ti­ve advan­ta­ge (steel, tex­ti­les, tob­ac­co, beef and veal)” (Zivko­vic 2015: 48) and the pro­duc­ts of the machine­ry bought by the­se loans could not be sold at good pri­ces any more. Second­ly, as the IMF chan­ged its poli­cy towards mone­ta­ry sta­bi­li­ty in 1979, “the inte­rest rate on the U.S. dol­lar sky­ro­cke­ted, and with it the for­eign debt of all coun­tries hol­ding debt in tho­se dol­lars” (Wood­ward 1995:48) lea­ding to a even hig­her finan­ci­al bur­den for Yugo­s­la­via.

4.2 The Aus­teri­ty regime of IMF and EEC

Unab­le to com­pe­te on the glo­bal mar­ket and suf­fe­ring from an increa­sing for­eign debt, the Fede­ra­ti­on was on the “brink of bankrupt­cy” (Unkov­ski-Kori­ca 2015: 39). To avo­id not being able to ser­ve Yugoslavia’s debt obli­ga­ti­ons, the LCY took more short-term loans from the IMF, recei­ving the lar­gest loan in the histo­ry of the IMF in 1981. The IMF and the EEC (European Eco­no­mic Com­mu­ni­ty) pre­sen­ted the LCY a pro­gram­me they had to fol­low in order to recei­ve the­se loans and and pro­mi­sed them they would reco­ver eco­no­mi­c­al­ly if they would fol­low it rigo­rous­ly. The program­me was basi­cal­ly one of aus­teri­ty and also “one of the first struc­tu­ral adjust­ment pro­gram­mes in the world” (Zivko­vic 2015: 49). The Yugo­s­lav Fede­ra­ti­on aban­do­ned Food and basic com­mo­di­ty sub­si­dies to decrea­se import, “pri­ces rose by one-third 1983” (Wood­ward 1995: 51). All imports not cri­ti­cal to pro­duc­tion were pro­hi­bi­ted. Hig­her inte­rest rates on for­eign cur­ren­cy bank accounts were meant to pro­vi­de the Fede­ra­ti­on with more liqui­di­ty. Invest­ment in soci­al ser­vices and infra­st­ruc­tu­re were com­ple­te­ly fro­zen to mini­mi­ze spen­ding. All firms were obli­ged to lay off workers if facing los­ses to impro­ve their com­pe­ti­tiveness (see Wood­ward 1995: 51).

Tog­e­ther, the­se mea­su­res lead to mas­si­ve unem­ploy­ment of up to 50% in some repu­blic and to a gene­ral fee­ling of having to sur­vi­ve in an increa­singly com­pe­ti­ti­ve and hos­ti­le envi­ron­ment, even in the wealt­hi­er repu­blics. 25% of Yugoslavia’s inha­bi­tants were con­si­de­red to be under the pover­ty line (Wood­ward 1995: 52). Peop­le may have coped with rising unem­ploy­ment and scar­ce resour­ces if the­re had been a soci­al net like twen­ty years ago, but tho­se wel­fa­re insti­tu­ti­ons had also fal­len vic­tim to aus­teri­ty mea­su­res and could do very litt­le to relax the situa­ti­on. As the­se were gone, peop­le were desper­ate­ly sear­ching for new ways to pro­tect them­sel­ves and their fami­les and also for the rea­sons behind this sud­den dete­rio­ra­ti­on of their living stan­dards.

4.3 The end of soli­da­ri­ty

The IMF had dis­mant­led the wel­fa­re insti­tu­ti­ons but rea­li­zed that a strong cen­tral government was nee­ded for the eco­no­mic poli­cy chan­ge it deman­ded. It thus ”began to tie con­di­ti­ons for new credits to poli­ti­cal reform” (Wood­ward 1995:74). The “IMF and EEC deman­ded the recen­tra­li­sa­ti­on of the Yugo­s­lav fede­ra­ti­on to dri­ve through macroeco­no­mic sta­bi­li­sa­ti­on and finan­ci­al disci­pli­ne” (Zivko­vic 2015: 49). It seems very likely that this very demand was the cata­lyst for the split-up of Yugo­s­la­via and the con­se­quent war. The rea­son why the demand for recen­tra­li­za­ti­on pro­ved to be so dest­ruc­tive was the fier­ce com­pe­ti­ti­on on the inter­na­tio­nal mar­ket and the very une­qual posi­ti­on on this mar­ket of the dif­fe­rent repu­blics.

Slo­ve­nia had a strong, export ori­en­ted eco­no­my which was able to com­pe­te on the glo­bal mar­ket and impor­ted most of its pri­ma­ry com­mo­di­ties from out­si­de of Yugo­s­la­via. Ser­bia and its auto­no­mous regi­ons Koso­vo and Voj­vo­di­na on the other hand, were still lar­ge­ly agri­cul­tu­ral and more depen­dent on the inter­nal mar­ket and also redis­tri­bu­ti­on on the federal level to deve­lop their eco­no­my. This redis­tri­bu­ti­on on the federal level and the expen­ses for the federal army were increa­singly seen as an unne­cessa­ry bur­den by the Slo­ve­ne Lea­dership. Tog­e­ther with the Croa­ti­an government, it oppo­sed expen­dit­ures for defen­se and deve­lop­ment in the south with a neo­li­be­ral “trick­le-down” rea­so­ning. “They argued that pro­duc­tivi­ty was decli­ning becau­se redis­tri­bu­ti­on sap­ped the incen­ti­ve of firms and workers and that growth and exports would revi­ve fas­test of firms that were pro­fi­ta­ble (and the repu­blics in which they were loca­ted) made decisi­ons on investment”(Woodward 1995:69). It was in this cli­ma­te of dwind­ling inter­nal resour­ces, increa­sing debt and vanis­hing soli­da­ri­ty that natio­na­list ide­as beca­me more and more appe­aling. For Slo­ve­nia, natio­nal inde­pen­dence was a way to get rid of the obli­ga­ti­on to con­tri­bu­te to the Fede­ra­ti­on. For Ser­bia, the inte­gri­ty of the Fede­ra­ti­on and the IMF reform cour­se see­med the only way to a sta­ble eco­no­my, but it had to face gro­wing pro­test, espe­ci­al­ly in Alba­nia. The Ser­bi­an government’s refu­sal to accept the sepa­ra­tist move­ments in Alba­nia, Slo­ve­nia and Croa­tia was increa­singly seen as an attempt to domi­na­te the others repu­blics and thus its peop­le. Alt­hough Slo­ve­nia and the inter­na­tio­nal credi­tors (IMF and EEC) had oppo­si­te aims in the cen­tra­li­za­ti­on-decen­tra­li­za­ti­on deba­te, “they both atta­cked the sta­bi­li­zing poli­ti­cal mecha­nisms of the socia­list peri­od” (Wood­ward 1995:80). When Slo­ve­nia fai­led to con­vin­ce the other repu­blics with its idea of more inde­pen­dent repu­blics at the Extra­or­di­na­ry Con­gress of the League of Com­mu­nists in Janu­a­ry 1990, it left the League for good. The remai­ning par­ties could not agreed on how to deal with Slovenia’s exit and the LCY was effec­tively dis­sol­ved (see Wood­ward 1995: 115). When the army – in an attempt to pro­tect the inte­gri­ty of the Fede­ra­ti­on – took actions against pro­tes­ters in Croa­tia, kil­ling twen­ty eight peop­le, poli­ti­cal ten­si­ons esca­la­ted fur­ther. In the same year, the fol­lo­wing mul­ti­par­ty elec­tions streng­t­he­ned natio­na­list par­ties, like the HDZ of Fran­jo Tudj­man which cam­pai­gned for “sover­eig­n­ty” and the SPS of Slo­bo­dan Milo­se­vic which won with the slo­gan “With us the­re is no inse­cu­ri­ty” (see Wood­ward 1995:120–121). The fol­lo­wing esca­la­ti­on of the con­flict bet­ween tho­se par­ties is not part of this essay, but it should have beco­me appa­rent how they them­sel­ves were the pro­duct of the eco­no­mic situa­ti­on in Yugo­s­la­via.

5. Con­clu­si­on

A neo­li­be­ral coup d’etat?

Wood­ward claims that the European governments did very litt­le to resol­ve the Yugo­s­lav cri­sis befo­re the war began in ear­nest (see Wood­ward 1995:152). She exp­lains this fact with the focus on other pro­blems, like to situa­ti­on in the midd­le-east, all the other European coun­tries had, alt­hough an emer­ging war in a near­by coun­try does not seem like a minor issue governments would nor­mal­ly more or less igno­re. One may have to take into account, that around the 1970s “Com­mu­nist and socia­list par­ties were gai­ning ground, if not taking power, across much of Euro­pe […] The­re was, in this, a clear poli­ti­cal thre­at to eco­no­mic eli­tes and ruling clas­ses ever­y­whe­re” (Har­vey 2005: 15) It seems pos­si­ble that the­re might have been litt­le inte­rest in resol­ving the cri­sis in Yugo­s­la­via from the point of view of the capi­ta­list class, as this might have given the Yugo­s­lav “midd­le-way” pro­ject a cer­tain pres­ti­ge that would have ques­tio­ned the hege­mo­nic power of the neo­li­be­ral eli­te.

Apart from what the moti­ves of the IMF and EEC behind the aus­teri­ty regime were,I doubtthe war in Yugo­s­la­via would have hap­pen­ed wit­hout it. The ques­ti­on if the break­down of Yugo­s­la­via in the wake of the neo­li­be­ral reforms was an unfo­re­se­en side-effect of a genui­ne belie­ve in the wis­dom of ‘the mar­ket’ or if the neo­li­be­ral eli­tes were awa­re of the likely con­se­quen­ces of such an aus­teri­ty regime and wel­co­med them in order to com­ple­te the rest­ruc­tu­ring, can not be ans­we­red with my cur­rent know­ledge. Har­vey agrees with Dume­nil and Lévy who say that “neo­li­be­ra­li­za­ti­on was from the begin­ning a pro­ject to achie­ve the res­to­ra­ti­on of class power” (Har­vey 2005: 16) and if you see it this way, the rest­ruc­tu­ring of the Yugo­s­lav Fede­ra­ti­on was suc­cess­ful, the self-manage­ment approach seems com­ple­te­ly dis­credi­ted. The total col­lap­se might have been necessa­ry to com­ple­te the neo­li­be­ral reor­ga­ni­sa­ti­on, becau­se “It is only when the inter­nal power struc­tu­re has been redu­ced to a hol­low shell and when inter­nal insti­tu­tio­nal arran­ge­ments are in total cha­os, eit­her becau­se of col­lap­se (as in the ex-Soviet Uni­on and cen­tral Euro­pe) […] , that we see exter­nal powers free­ly orches­tra­ting neo­li­be­ral rest­ruc­tu­rings.” (Har­vey 2005:117) With the richest 1% of huma­ni­ty now owning more than all others com­bi­ned (see Oxfam 2016), class war from above is still thri­ving but the neo­li­be­ral para­digm is also increa­singly cri­ti­zi­sed. It would be inte­res­ting to rese­arch if peop­le in for­mer Yugo­s­la­via are awa­re of the neo­li­be­ral pro­ject and what kind of alter­na­ti­ves are dis­cus­sed at the moment.

Ziko­vic, Andrea 2015: From the Market…to the Mar­ket: The Debt Eco­no­my After Yugo­s­la­via. In: Hor­vat, Sreć­ko and Ŝtiks, Igor 2015: Wel­co­me to the desert of post-socia­lism: radi­cal poli­tics after Yugo­s­la­via. Lon­don and Brook­lyn: Ver­so.